Morningstar eyes growth through AI and public-private market convergence

Business Times

18-05-2025

[SINGAPORE] Investment research and management company Morningstar is strategically positioning itself to capture opportunities arising from the convergence of public and private markets.
Having embarked nearly 10 years ago on a mission to bring transparency to public markets, the Nasdaq-listed multi-asset data analytics and research provider now seeks to replicate that success in the private market space.
Chief executive officer Kunal Kapoor told The Business Times in a recent interview that the company's goal is to create a common language that investors can easily understand and apply to their portfolios.
He noted that investors need to understand how private market assets fit into their portfolios, compare them to public market investments, and recognise differences, such as the lack of liquidity in private markets.
Kapoor stressed that investor understanding must evolve for private markets to become more accessible to individual investors. 'Who better to do that work for investors than us?' he added.
Empowering investors
Reflecting on the transformation of public markets over the past two decades, he highlighted how they evolved from being opaque, costly and poorly regulated to offering lower fees, more transparency and better products to investors.
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Kapoor said significant progress has been made in areas that Morningstar has long advocated for on behalf of investors.
'It's fair to say that if you are a public market investor, you should feel pretty good in most parts of the world about what you have access to, the fees being charged and the transparency surrounding it,' he said.
However, private markets have yet to undergo a similar transformation. Kapoor pointed to a lack of transparency, highlighting that fees in certain sectors are opaque and high, with many intermediaries taking a cut.
He also noted that the understanding of how to select and manage investments is largely confined to institutional investors.
'Why can't a Singaporean investor who historically has had access to public markets also think about access to the private markets for certain parts of their portfolio?' Kapoor asked.
He noted that while short-term needs should not be placed in private assets, long-term assets which are set aside for 10 to 20 years could benefit from being allocated to private markets. This approach can provide diversification, potential for better returns and access to managers.
'This can only happen if there is transparency, clarity on fees and a common language through which you can evaluate it – and this is an opportunity for Morningstar,' added Kapoor.
Driven by its focus on the convergence of public and private markets as well as leveraging artificial intelligence (AI) to transform client workflows, Morningstar finished 2024 on a strong note.
It reported a 9.7 per cent increase in total revenue, reaching US$591 million compared to the previous year. Organic revenue grew by 10.6 per cent, while operating income saw a notable rise of 78.2 per cent, reaching US$168.2 million.
Morningstar is actively leveraging AI to enhance its products and services. Investors and investment professionals can tap on its generative AI chatbot, Mo, which is designed to summarise insights in a conversational format.
Mo is supported by the Morningstar Intelligence Engine, a platform that pairs the company's extensive investment research library with Microsoft's Azure OpenAI Service.
Kapoor pointed out that it can become frustrating to constantly click around an website to find certain information but Mo solves this by instantly providing answers in a conversational format. Users can simply ask Mo for specific investments or compare past and present opinions on stocks.
Kapoor noted that while users initially approach AI with caution, their comfort level increases over time. For instance, he observed that the nature of their questions directed at Mo has shifted from being purely transactional to more thoughtful inquiries.
He added: 'I am very bullish about AI's ability to get people the answers they want much faster, in a more accurate way, and to allow us to focus on things that are of higher value. And when I think about how we help our customers grow and investors be successful, it's partly by making sure the tasks that are repetitive can be done without all those clicks.'
As people get more comfortable with AI, they will accept automation for repetitive tasks. This shift, he believes, will be critical for financial services, where firms must adapt to meet evolving client expectations and add value through automated solutions.
Making a difference
As financial services transform with AI's rise, Kapoor reflected on what has kept him at Morningstar for almost three decades.
Kapoor, who recently turned 50, believes the company's mission to empower investor success has kept him motivated.
'You get up every day and feel good about the work you do and the difference you are making in people's lives,' he said.
Another driving force has been the company's growth. Kapoor recalled that when he started at Morningstar, it had less than US$50 million in revenue, with about 200 employees. Today, the company generates more than US$2 billion in revenue and employs more than 10,000 people worldwide.
Kapoor noted Morningstar's global expansion, which has grown from a single office in Chicago to a presence in 32 countries, including Singapore. The company's workforce in Singapore has increased by 66 per cent from January 2024 to March 2025.
He observed that Singapore's regional influence has grown over the past decade, with global capital flowing into the city-state and more Singaporean investors looking to invest internationally.
'Our expansion in Singapore is a good test of how we have been growing in Asia in general,' he added.
In addition to Singapore, Morningstar has nine offices across the Asia-Pacific region, including in Hong Kong, Japan, China, India, South Korea, Taiwan and Australia.